This is a holdover from Beta 3, but the AI for peace/surrender is still borked up the wazoo.  The price of a cease-fire is astronomical, but you can get pretty much any sov to surrender to you as long as you're a little more powerful than they are.

I guess the negotiation AI hasn't gotten any love with this beta.    Frogboy's been slacking!   

I noticed that all three of the AIs that I've gotten to surrender in my current game are carrying at least a dozen bracers (as noted in another thread -- another AI bug from last Beta).  They're also not equipping their mounts, though who knows, maybe they just dismount to surrender.

PS.  Newly minted vassals should appear as incapacitated in your nearest city.